Fed Uncertainty and Middle East Tensions Diminish Stocks:
Stocks fell for a third straight week amid escalating tensions in the Middle East and mixed signals from Fed officials.
Stocks Retreat
Markets began the week rattled by rising tensions in the Middle East over the weekend. A bit of good news punctuated an otherwise sour Monday, as a stronger-than-expected retail sales report showed consumers were spending despite rising inflation.1,2
On Tuesday, remarks from Fed Chair Jerome Powell indicated a shift in thinking—from being confident to not-so-confident about interest rate cuts in 2024. He said rates might need to stay higher until the Fed meets their 2% inflation target.3,4
Source: Charles Schwab & Co., Inc
On Friday, the markets saw further declines, but investors were somewhat reassured by the perception that Thursday’s retaliatory actions in the Middle East were restricted in scope.5
Source: Charles Schwab & Co., Inc
Silver Linings
When stocks are in a downtrend, it’s important to keep perspective and realize that markets move in cycles. Here are a couple of bright spots from last week and perhaps some good news that may influence trading in the week ahead:
- While Chair Powell said last week that the Fed may keep rates higher for longer, he also said the Fed does not intend to raise rates for now.
- Despite inflation concerns, individuals were in a spending mood in March. Retail sales increased 0.7% for the month, more than twice the consensus forecast.
- “Earning season” picks up during the next four weeks. For the week ending April 26, more than 800 companies will give updates on business conditions in Q1.6
This Week: Key Economic Data
Source: Bloomberg Finance L.P.
This Week: Companies Reporting Earnings
Source: EarningsWhispers
At Concord Asset Management, we design portfolios for the long run, with the ability to navigate various market cycles. However, you can have confidence that we are monitoring these market-moving events, and we will make reasonable, tactical adjustments as necessary.
Author
Gary Aiken
Chief Investment Officer
Concord Asset Management
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Footnotes and Sources
1The Wall Street Journal, April 19, 2024
2CNBC.com, April 15, 2024
3The Wall Street Journal, April 16, 2024
4CNBC.com, April 16, 2024
5CNBC.com, April 19, 2024
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